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May 17, 2017

Medicaid presents key hurdle in Senate negotiations on ACA repeal

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    Senate negotiators are working on a potential compromise on provisions included in the American Health Care Act (AHCA) that could impose tighter spending caps on Medicaid.

    The House just passed ACA repeal. Now what?

    The House-approved AHCA, which would repeal and replace major portions of the Affordable Care Act (ACA), would shift Medicaid to a per capita allotment model. It also would allow states that expand Medicaid under the ACA by Jan. 1, 2020, to let individuals enrolled under the expansion maintain coverage—but only as long as those individuals remained continuously eligible for Medicaid.

    Senate Republicans currently are working on their own plan to repeal and replace the ACA. Some Republican senators that represent states that have expanded Medicaid under the ACA have expressed concerns that the AHCA's proposed changes to the program could harm U.S. residents enrolled in Medicaid under the expansions, while other GOP senators have said the proposed cuts to Medicaid do not go far enough.

    Negotiators seek compromise

    According to the New York Times, Senate negotiators are working on a potential compromise that would maintain the ACA's Medicaid expansions for a longer period of time than the AHCA proposes, but also would subject Medicaid to tighter federal spending limits than proposed in the AHCA. For instance, one option being discussed would tie growth in the spending limits to the rate of inflation in the United States, rather than the rate of medical inflation, which typically increases at a faster pace than overall inflation. The AHCA currently ties growth in the proposed federal spending limits on Medicaid to medical inflation.

    The spending limits would affect the entire program, including Medicaid coverage for children and individuals with disabilities. Under the limits, the federal government would only pay a certain amount to states to provide Medicaid coverage, and states would be responsible for the remainder of the costs.

    While talks in the Senate are ongoing, Axios' "Vitals" reports that moderate GOP senators are pushing back against ideas that would further reduce Medicaid spending. 


    Some experts say limiting federal funding for Medicaid could force states to scale back the services covered under the program or limit the number of individuals who can enroll.

    Leslie Clement, director of health policy and analytics at Oregon Health Authority, said, "We have a hard time seeing this as anything more than a budget fix for the federal government," adding, "It's a cost shift to Oregon and other states."

    Citing similar concerns, American Medical Association CEO James Madara in a letter sent to senators on Monday wrote, "Changes to the financing of Medicaid must also guarantee that the safety net remains strong and is able to respond quickly."

    Sens. look to industry groups, but the extent of industry's influence remains unclear

    As those Medicaid discussions are taking place, some senators are also engaging industry groups for ideas on how to repeal and replace the ACA, Modern Healthcare reports.

    Industry groups have widely criticized the House-approved AHCA, which, Modern Healthcare reports, was negotiated and approved with little to no industry involvement.

    According to Modern Healthcare, Senate Finance Committee Chair Orrin Hatch (R-Utah) has asked health care lobbying groups to submit by May 23 ideas on how to repeal and replace the ACA.

    In addition, six GOP senators on Thursday met with leaders of six major physician groups to discuss the groups' health reform priorities.

    'A crucial first step' or 'a debacle'? How industry stakeholders are reacting to the AHCA

    Shawn Martin—senior vice president for advocacy at the American Academy of Family Physicians, which was one of the groups involved in the meeting—said, "I'm encouraged by the conversations we're having with (Senate) members and staff." He added, "I think they're listening to why we and other physician organizations think the House bill is problematic and how we can move forward with improvement to the [ACA], not simply repeal. It's the start of a good dialogue on what's possible."

    Similarly, Alliance of Community Health Plans CEO Ceci Connolly said her group is "encouraged by the initial steps by the Senate to take a deliberate approach that includes speaking to patients, providers, and health plans."

    But other health care leaders seem more cautious. Jeff Van Ness, a spokesperson for the Association for Community-Affiliated Plans, said, "It's too early to say definitively" whether Senate Republicans are going to engage more with industry stakeholders than House Republicans did when they crafted the AHCA. However, he said the "experience thus far" has trended in that direction.

    Billy Wynne, a lobbyist for hospitals and other health care groups, said, "I think it's true the Senate will be more receptive to stakeholder input than the House was, but they still aren't doing hearings or mark-ups" and are "likely to steamroll ahead regardless" (Pear, New York Times, 5/15; Nather, "Vitals," Axios, 5/16; Diamond, "Pulse," Politico, 5/16; Meyer, "Vital Signs," Modern Healthcare, 5/15; Nather, "Vitals," Axios, 5/17).

    Learn how states want to change Medicaid

    HS Secretary Tom Price has signaled the administration’s intent to expand use of waiver authority to grant states flexibility. Join us on May 22 for a webconference on Medicaid waivers and how states plan to use use them.

    The webconference will highlight an overview of waivers that are available, the Medicaid reform goals that states often pursue, and the evolution of reform models over time.

    Register Now

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